Title of Paper
Hotel Operating Performance Stabilization in Emerging Markets – Myth or Fact?
Abstract (150 Words)
Guided by the resource base theory, this study investigates the performance stabilization of new hotels in emerging markets. Potential competitive advantages, i.e., real estate type (mixed-use vs. standalone), location type (distance from downtown and airport) and scale (room count and meeting space), were assessed for their impacts on pace and level of performance stabilization. Performance measures included profitability measures, e.g. gross operating profit percentage (GOP%), in addition to standard operating metrics of ADR, occupancy and RevPAR. Performance data from 105 hotels in China, Indonesia and Thailand showed that contrary to prevailing industry assumption, which originated from mature markets, most hotels did not stabilize within the industry norm of 3 years when standard operating metrics were used. Instead, GOP% was shown to be a better measure of stabilized performance. The impact of each competitive advantage on pace and level of GOP% stabilization was also empirically assessed.
Cover Page
Hotel Stabilization Short Abstract 20190110.docx (27 kB)
Short Abstract
Hotel Operating Performance Stabilization in Emerging Markets – Myth or Fact?
Guided by the resource base theory, this study investigates the performance stabilization of new hotels in emerging markets. Potential competitive advantages, i.e., real estate type (mixed-use vs. standalone), location type (distance from downtown and airport) and scale (room count and meeting space), were assessed for their impacts on pace and level of performance stabilization. Performance measures included profitability measures, e.g. gross operating profit percentage (GOP%), in addition to standard operating metrics of ADR, occupancy and RevPAR. Performance data from 105 hotels in China, Indonesia and Thailand showed that contrary to prevailing industry assumption, which originated from mature markets, most hotels did not stabilize within the industry norm of 3 years when standard operating metrics were used. Instead, GOP% was shown to be a better measure of stabilized performance. The impact of each competitive advantage on pace and level of GOP% stabilization was also empirically assessed.